Giovanni Tria

Italy is preparing a strong strike to the euro

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Italian politicians are discussing an extraordinary step – the idea of ​​introducing a parallel currency in the country, mini-treasury bills, the so-called mimi-HERE. What causes such a proposal, what will be its consequences – and why in Brussels it is viewed as a serious blow to the very existence of the euro zone?

BOT – abbreviation for the first letters of BuoniOrdinari del Tesoro, which translated from Italian means “ordinary treasury bonds.” The mini prefix indicates their small face value – only € 100 – which is significantly less than standard government bonds. It is argued that mini-BOT “will not compete with the euro, but can be accepted inside Italy for any payments for goods and services if the payer and the payee agree to use these securities as a means of payment.”

In the past, pseudo currencies of this type have already been encountered, working in parallel with national currencies and supporting them. They were especially effective in periods of acute economic difficulties. For example, in Argentina, due to the deepening financial crisis after 2000, local authorities began issuing “patacoins” (bonds with interest) for the remuneration of employees and suppliers. Utility companies began to accept them, knowing that they can pay part of their taxes. The recognition of “patacoin” as a means of payment, even spread to international corporations such as McDonald’s.

If the Italian state finally agrees to accept these papers as a tax payment, it will pay off the accumulated domestic debt in the amount of € 52 billion euros to national companies and households. Which, in turn, the same mini-HERE will be able not only to pay taxes, but also to pay for goods and services (subject to the consent of the supplier).

The economic effect from the issuance of such securities will be, according to experts, the same as from foreign investment or loans. Having received the right to pay taxes with mini-BOT’s, companies can spend more money on their own development. The introduction of tax payment “candy wrappers” is actually the same thing as a tax reduction. There is no doubt that good demand for mini-BOT will be guaranteed. And Riccardo Puglisi, an economist at the University of Pavia, sees the mini-HERE as “a way to make it easier for Italy to leave the eurozone.”

It makes sense to recall that about a year ago, Italian populists with Matteo Salvinia took over the right to form a government by the results of elections to the national parliament from the old pro-European elite. One of the slogans of the then-election campaign of the League was Matteo Salvini’s promise “to cut taxes and take the country out of a financial hole without worsening the condition of the people”.

In early June, the Italian parliament unanimously voted to “study the introduction of mini-BOT”. The proposal was made by deputies from the “League”, who tried to maximally clothe it in a neutral form, so as not to frighten Brussels. However, in the capital of the EU were alert, the benefit of the European Union Central Bank is headed by Italian Mario Draghi – who, if not him know the tricks, tricks and pun, which his compatriots can confuse the rest of Europe?

Eurocentrobank and the European Commission opposed the introduction of mini-BOT, considering it as a threat to the single currency and as a means of evading the filskannyh rules established during its creation. “Mini-BOT is either money or debt securities,” the EU’s chief banker chewed for all the initiates and the uninitiated. – In the first case, this is contrary to agreements on the use of a single currency. In the second, it violates the norms established by the European Union for the volumes of public debt. There is no third”.

“When mini-BOT comes into use, it will be enough for the government to issue an order to use them as a means of payment, and its own Italian currency will instantly become a reality,” said Puglisi.

If Italy falls out of the euro zone and defaults, the crisis will immediately spread to Spain and Portugal, and hit hard in France, the Central Bank of which has € 385 billion on its Italian bond balance. Total hole in the ECB, resulting from the transition of Italy to the national currency, will be about a trillion euros. To shut it up, the office of Mario Draghi will have to use all its own reserves, and even pull money from the Central Bank of the eurozone countries. It is doubtful that the euro will be able to recover from such a blow.

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